Companies that export are more innovative, productive, profitable and risk resilient. This, the second in a four-part series, talks about productivity. (See also: 1st part – Innovation, 3rd part – Profitability, 4th part – Managing risk)
Shortly after it launched in Canada, AXYS Technologies Inc. realized that to grow, it would have to expand beyond the relatively small Canadian market. The company, which designs, manufactures and deploys remote environmental monitoring systems, was selling primarily to Environment Canada and realized that to become more productive, it would have to find similar clients in other markets.
Enter the world of export.
“Exporting connects us with different types of markets and different types of customers and exposes us to the different demands and needs of those customers,” said Robin Thomsen, Marketing Manager for AXYS Technologies. “These are things we wouldn’t otherwise do. When we get more market input, we make modifications or develop new products based on our prospective market.”
It’s a familiar refrain among exporters. Compared to their domestic counterparts, exporting companies are more productive, a fact borne out in studies conducted by Statistics Canada, Deloitte and the Conference Board of Canada.
AXYS does a lot of business in offshore wind monitoring and finds the European market is the one that demands this service. The U.S. market is slowly coming on board, but it’s barely on Canada’s radar.
“Without exporting, we wouldn’t be involved in that at all and it was a significant portion of our sales last year,” Thomsen said. “The work we did was for a product that was very innovative and completely new to the industry and if we hadn’t had an export market for it, we never would have built it.”
Because they expose themselves to other markets and therefore have a more competitive market, exporters are forced to be more productive, confirms Bill Currie, Vice Chair and Americas Managing Director at Deloitte.
“Exporting is actually a key determinant of our most successful companies,” Currie said. “I think it comes down to competitive intensity. In Canada, it’s a small market; competitive intensity is not that high. When you expose yourself to other markets, you can’t just be very good, you have to be even better. If you’re exporting to the U.S., you have to compete with companies that are highly competitive. You have to be as good or better than they are in order to compete.”
Jayson Myers, CEO of Canadian Manufacturers & Exporters, agrees. And he thinks Canadian manufacturers are better placed to export than their U.S. counterparts.
“When I go to [see] manufacturers in the U.S., a lot of them are producing high-volume products, largely for the domestic market,” Myers said. “I always say when I’m travelling in Europe or in Asia that it’s easier to find a Canadian partner who is looking for an international partner and who is looking beyond the domestic marketplace than it is to find a U.S. partner.”
He noted that when Macdonalds expanded to Russia and China, it was the Canadian company that was charged with the openings because the Canadians knew how to do business internationally.